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Yesterday Was Eye of the Storm

US stock futures point to a sharply lower open Tuesday as earnings continue to falter. DuPont (DD) and Radio Shack (RSH) are the latest companies to fall short of expectations and trade lower. In the Daily Recap yesterday, we posed the question: was yesterday's action the eye of the storm or a positive sign. There was no momentum in the bounce despite the market recovering for small gains, giving us an indication that the bottom was not in.

If traders tried to buy the dip yesterday, they are coming in today a little uneasy. Yesterday's late buy program probably got some to cover shorts and it also baited in some longs as there was a small reversal pattern yesterday. There's not much you can do about it, but simply take a deep breath and continue to follow your process if you find success with it. In my new Swing Trading Course we emphasize the need to create a defined trading plan in order to effectively gauge your performance and progress.

S&P futures are down 10-16 handles, below Yesterday's low is 1422. There are two small points of reference to watch now around 1416-1417. The most significant support doesn't really come in until 1396-1397, then there is a major area around the 100- and 200-day moving averages in the 1380 zone.

On days like this you measure your commitment if you are caught. Look to see if anything goes green to help take us off the lows. Keep it simple and only look to the leaders. See if financials or homebuilders can hold in. Also, tech and Apple (AAPL) did show a few signs of life yesterday.

Dupont (DD) is 5% lower this morning after the chemical giant reported a decline in fourth quarter earnings and said it would cut 1,500 jobs. The damage was much more severe in Radio Shack (RSH), which is down around 15% pre-market after swinging to a third-quarter loss. Yahoo! (YHOO) is bucking the trend this earnings season as it is up 4% this morning after earnings last night. New CEO Marissa Meyer, a former long-time Google exec, appears to be off to a good start.

Speaking of Apple (AAPL) the consumer electronics company will have another product event this afternoon in which it is expected to unveil the iPad Mini. The smaller tablet is expected to allow AAPL to compete with the smaller, lower-priced tablets that have entered the market, and if the event goes well it could have a positive impact. AAPL is down a bit this morning with the market, but traders will be watching closely to see if it can go positive.

Earnings season continues to rumble on, with key reports after the close today from Facebook (FB) and Netflix (NFLX) among others.